More Hard Times Ahead this 2016 as Budget Failure Looms

         
As the IMF predicts that Nigeria’s economy will contract this year, Minister of Budget, Senator Udo Udoma on Thursday has painted a more bleak picture for the economy this year, saying government revenues reached only 55 per cent of what had been targeted in the first quarter of the year, blaming attacks on oil facilities in the southern Niger Delta region.


This came as the Secretary to the Government of the Federation (SGF ), Mr. Babachair David Lawal said that the Federal Government may not fully implement the 2016 national budget; also attributing the situation to the activities of the economic saboteur-militants.

The SGF said while the economy should look better in second half of the year, growth will probably not “be sufficiently fast, sufficiently rapid to be able to negate the outcome of ” the first and second quarters.

The economy shrunk by 0.4 percent in the first quarter, the first contraction in more than a decade, as oil output and prices slumped and the passing of the 2016 Appropriation Act was delayed.

According to New Telegraph, a currency peg and foreign-exchange trading restrictions, which were removed last month after more than a year, led to shortages of goods from fuel to most consumables and contributed to the contraction in the first three months of the year.

Leon, who spoke in a recent interview in Abuja, said, while conditions that impeded growth in the first half of the year, including shortages of power, fuel, and foreign exchange, as well as the higher price of dollars on the parallel market, may have been reduced, they still weigh on the economy. IMF cut its 2016 growth forecast for Nigeria to 2.3 per cent in its April Regional Economic Outlook from 3.2 per cent projected in February.

The World Bank lowered its forecast to 0.8 per cent last month, citing weakness from oil output disruptions and low prices. Last year ’s expansion of 2.7 per cent was the slowest in two decades, according to IMF data.

“Most people would agree that if you should fix one thing in this country, it should be power,” Leon said. “There is a need to start changing the power equation from 2016, from today, not tomorrow or later.”